Sealaska officials made the announcement at a U.S. Department of Energy Ethanol Workshop in Ketchikan this week.

What's now called the Gateway Industrial Complex would be ideal for the $43 million Southeast Alaska BioEnergy Project, said Sealaska Natural Resource Manager Russell Dick. The plant could use existing infrastructure of the former pulp mill and be integrated with Gateway Forest Products' nearby veneer and sawmill operations.

The operation eventually could produce 6 million gallons of fuel-grade ethanol a year. Construction of a start-up plant, producing 2 million gallons annually, could begin in about two years.

About half of the raw material would be wood residue from the veneer mill, said Dick. A substantial byproduct of the process is lignin, which can be burned for electrical generation.

The plant, which would employ about 40 workers, also would generate excess power that could be used at the veneer mill or sold to the local utility.

The Juneau-based Southeast Alaska Conservation Council called the plan risky.

"The economically and ecologically questionable proposal will likely require large subsidies and develop a huge appetite for Tongass old-growth forests to operate," said a press release from SEACC organizer Aurah Landau.

The company is not interested in cutting trees down to chip them and convert them to ethanol, said Rick Harris, Sealaska's senior vice president for natural resources and acting vice president for Sealaska Timber Corp.

There is a large supply of wood waste in the region now, he said. If local mills and operators were unable to supply enough, mountains of sawdust and chips are available nearby in Canada, he said.